TY  - JOUR
AU  - Turnovsky,Stephen J.
TI  - The Gains from Fiscal Cooperation in the Two Commodity Real Trade Model
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2466
PY  - 1989
Y2  - March 1989
UR  - http://www.nber.org/papers/w2466
L1  - http://www.nber.org/papers/w2466.pdf
N1  - Author contact info:
Stephen Turnovsky
Department of Economics
301 Savery Hall; Mail Stop DK 30
University of Washington
Seattle, WA   98195
Tel: 206-545-8028
E-Mail: sturn@u.washington.edu
AB  - This paper analyzes the gains from fiscal cooperation within the context of the standard two commodity real trade model. It shows how the adjustment in terms of trade is the critical factor in determining the effects of moving from a noncooperative equilibrium. In general, a noncooperative equilibrium leads to an overexpansion of government expenditure on the export good and an underexpansion on the import good, relative to a cooperative equilibrium. The specific example of a logarithmic economy is also considered. The paper discusses further the welfare effects resulting from the formation of a coalition among two countries.
ER  -